Income tax law changes again

Tax residence gets new rules, support for R&D will increase and the spa industry gets new support instruments.

Cyclist Peter Sagan is one of the Slovak athletes who lives in Monaco.Cyclist Peter Sagan is one of the Slovak athletes who lives in Monaco.(Source: AP/TASR)

The law on income tax is changing again. The Slovak parliament adopted extensive revisions on December 7, bringing changes in the definition of tax residence, new measures to support the spa industry and an increase in support to R&D, just to mention a few. The revisions will become valid from January 1, 2018, with some regulations becoming effective as of January 1, 2019.

Read also:Blog: Slovakia changes its tax policy: Sportsmen in Monaco will be taxed too

The new definition of tax residence for a private individual should prevent Slovak athletes and some others from income tax avoidance as of 2018. Up to now they have been able to live in countries like Monaco, considered a tax haven, and not pay taxes in Slovakia if they did not have permanent residence here. Based on the new regulations, family and economic rules will be taken into consideration.

Read also:Minister drafts a trap for athletes avoiding taxes

For the spa industry, the revision enables spa guests to increase their tax base that is exempt from taxation by €50. The revision also shortens the period of depreciation of the buildings used for spa treatments.

Support for research and development comes in the form of an R&D tax allowance increase from 25 percent to 100 percent of expenditure. It will also introduce the so-called patentbox that should stimulate production with higher added value and the employment of highly qualified workers.

Read also:Blog: Higher R&D tax allowance will not help

Furthermore, the revision includes tax changes related to mergers and the liquidation of companies.

Parliament failed to adopt a measure that would have prevented shell companies or company owners from siphoning profits from Slovakia. This measure related to the taxation of private individuals via the so-called CFC rules received votes from only 13 deputies. The Finance Ministry promises to return to this issue next year.

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